SecProbe.io

CORRESP
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Correspondence

551 Fifth Avenue · Suite 300

New York, NY 10176

Telephone: 212-297-9871

Facsimile: 866.422.0963

e-mail: jim.lusk@abm.com

James S. Lusk

Executive Vice President

and Chief Financial Officer

November 20, 2009

VIA EDGAR

Division of Corporation Finance

Securities and Exchange Commission

100 F. Street, N.E.

Washington, D.C. 20549

Attention: Jessica Barberich, Assistant Chief Accountant

    Re:

    ABM Industries Incorporated

Form 10-K as of October 31, 2008

Filed on December 22, 2008

File No. 001-08929

Ladies and Gentlemen:

On behalf of ABM Industries Incorporated (the “Company” or “ABM”), this letter responds to
comments raised by the staff (the “Staff”) of the Securities and Exchange Commission in a letter
dated October 30, 2009 with respect to the above-referenced filing. All references to years made in
the responses are based on the Company’s fiscal year that ends on October 31 and all references to
the Company’s Form 10-K refer to the Company’s Annual Report on Form 10-K for fiscal year ended
October 31, 2008, filed on December 22, 2008. For your convenience, our responses are keyed to the
comments in the Staff’s letter.

FORM 10-K FOR THE YEAR ENDED OCTOBER 31, 2008

Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operations,
page 19.

Results of Continuing Operations, page 27

    1.

    You disclose that the decreases in janitorial revenues within the Northeast and
Southeast regions were mainly due to reduced discretionary revenues from your financial
institution customers. Please provide us with and consider disclosing in future filings a
quantification of your exposure by geographic region and also by industry.

Response

The Company will consider disclosing revenues by geographic region in future filings. However, it
should be noted that the Company’s chief operating decision maker, its chief executive officer,
makes operating decisions and assesses performance based on the results of the Janitorial segment
in total, not based on results of geographic regions.

The Company currently does not have systems in place to capture its revenues by industry type.
However, since the Northeast and Southeast regions of the Janitorial segment have a significant
concentration of financial institution customers within their respective customer base, the Company
was able to review the individual revenues from its financial institution customers in these
regions and determine the impact of reduced customer discretionary revenue within those regions.

The Northeast and the Southeast regions’ revenues decreased by $1.0 million and $8.1 million,
respectively, during 2008 compared to 2007. Discretionary revenue from our financial institution
customers in the Northeast region decreased by $9.2 million in 2008 compared to 2007, which was
offset by revenue increases from non-financial institution customers of $8.2 million. Discretionary
revenue from our financial institution customers in the Southeast region decreased by $10.9 million
in 2008 compared to 2007.

Financial Statements and Notes

Note 1 — Basis of Presentation and Summary of Significant Accounting Policies, page 43

Allowance for Doubtful Accounts, page 44

    2.

    We note your accounting policy for your allowance for doubtful accounts. We also note
your disclosure on page 23 that accounts receivable over 90 days past due increased by
$23.4 million to $47.3 million at October 31, 2008 from $23.9 million at October 31, 2007.
In light of the significant increase, please tell us how you determined that your allowance
for doubtful accounts was adequate. You state that the allowance is typically estimated
based on an analysis of the historical rate of credit losses or write-offs and specific
customer concerns. You also note on page 10 that the current turmoil in the credit markets
and financial services industry may cause delays in collections; to the extent that you do
not

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expect historical rates to be reflective of expected future credit losses, tell us how
you have adjusted your allowance for doubtful accounts accordingly.

Response

The Company acquired OneSource Services, Inc. (“OneSource”) on November 14, 2007, which increased
gross accounts receivables by $94.7 million. Additionally, the OneSource acquisition increased the
Company’s revenues by $817.5 million for the year ended October 31, 2008. The Company’s gross
accounts receivable over 90 days past due increased by $23.4 million to $47.3 million at October
31, 2008 from $23.9 million at October 31, 2007. Approximately $11.4 million, or 48.7%, of this
increase was related to services provided by OneSource and the uncollected portion of the acquired
gross accounts receivables. The remaining $12.0 million of the increase in gross accounts
receivable over 90 days past due was primarily a result of increases in revenues in all operating
segments as a result of new business and the expansion of services to existing customers.

As of October 31, 2008, the allowance for doubtful accounts of $12.5 million was comprised of $3.8
million of specific reserves and $8.7 million of bad-debt reserves and sales allowance. Each of the
components of the allowance for doubtful accounts was determined as follows:

Specific Reserves

The Company’s specific reserve analysis is determined based on a detailed review of customer
accounts with balances greater than 180 days past due and for all customers that are presently
in bankruptcy or with which we are in litigation. Additionally, we review all existing balances
with former customers of the Company. The analysis to determine a specific reserve is based upon
various factors, including reviews by in-house counsel (for customers in bankruptcy or in
litigation) and takes into account historical payment trends from the Company’s collections
department. All amounts determined to be uncollectible, based on the individual facts and
circumstances related to the account, are specifically reserved for. Additionally, the Company
writes off all accounts receivable balances greater than 360 days past due, excluding amounts
determined to be collectible based upon specific individual circumstances.

Bad-debt Reserves

The bad-debt analysis performed at October 31, 2008 analyzed the three and five year averages of
actual write-offs, excluding specific reserves. Based on this analysis, the Company concluded
that a 0.5% reserve of gross accounts receivable was reasonable and appropriate.

Sales Allowance

The Company’s sales allowance analysis is estimated based on a review of historical credit
memos, net of invoice re-bills, as a percentage of gross accounts receivable. Credit memos

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are issued primarily for vacancy credits, concessions, disputed charges, and billing errors. The
sales allowance analysis performed at October 31, 2008, which was based upon an analysis of
actual credit memos issued for a two-year period ended August 31, 2008, concluded that a 1.0%
reserve of gross accounts receivable was reasonable and appropriate as of October 31, 2008.

The results of the Company’s analysis of the components of the allowance for doubtful accounts at
October 31, 2008 resulted in an allowance of $12.5 million, an increase of $6.1 million, or 95.4%,
compared to the $6.4 million recorded at October 31, 2007. The increase was primarily attributable
to the acquisition of OneSource. Additionally, as of October 31, 2008 and 2007, the allowance for
doubtful accounts represented 2.6% and 1.8%, respectively, of the gross accounts receivable.

As described in Item 1A. Risk Factors in the Company’s Form 10-K, the Company noted that the
then-current turmoil in the credit markets and financial services industry might impact the
Company’s ability to collect receivables on a timely basis and might negatively impact cash flows.
This specific risk was included as a risk factor since the Company believed that the then-current
turmoil in the credit markets could cause the Company’s actual allowance for doubtful accounts to
differ materially from what was estimated, since some customers might be unable to finance their
working capital requirements. While this risk to the Company was identified, known risks were
specifically reserved for and there was no evidence that historical trends were no longer
reflective of expected future credit losses. Based on actual collections of accounts receivable
during 2009, there have been no indicators that the allowance for doubtful accounts at October 31,
2008 was not appropriate.

Note 2 — Insurance, page 48

    3.

    We note that your self-insurance expense declined by approximately $23 million due to
adjustments made to your reserve during 2008. Please describe the specific factors and
assumptions that resulted in the reduced reserve balance.

Response

As described in Note 2 of the Notes to the Consolidated Financial Statements contained in Item 8,
“Financial Statements and Supplemental Data” in the Company’s Form 10-K, the Company periodically
evaluates its estimated claim costs and liabilities for self-insurance reserves, primarily related
to workers compensation and general liability exposures. During 2008, the Company evaluated its
self-insurance reserves on three separate measurement dates using the most recent claims and
trending data available at each date. The Company uses third-party service providers to administer
its claims. The case reserves for individual reported claims established by the third-party
administrator and the amount of claims paid in any period are

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considered by management in establishing its best estimate of the required self-insurance reserves.
Furthermore, the Company engages an independent actuary to develop a point estimate to assist in
determining its self-insurance reserves. The Company consistently adjusts its self-insurance
reserves to the point estimate after review and acceptance of the independent actuary’s work. The
self-insurance reserves are recorded and adjusted on an undiscounted basis.

During 2008, the Company noted the continuation of favorable developments in its claims management
process as well as the effects of favorable legislation in certain states, primarily in California,
which made it appropriate to reduce reserves. Additionally, the Company’s third-party administrator
increased its efforts to close out claims more quickly, which typically results in lower overall
costs.

The Company also continued to experience the favorable impact of prior workers compensation reforms
in California. Prior to the reforms of 2003 and 2004, the California workers compensation system
was characterized by high insurance rates to employers and variability in benefits to injured
workers. To address rising costs, a series of reforms were passed by the California Legislature.
The reforms focused on, among other things, revising medical fee schedules, improving quality of
care, encouraging medical utilization review, capping temporary disability benefits, and reducing
the number and size of permanent disability awards. Following the implementation of reforms, from
2004 to 2008, the industry workers’ compensation claims cost benchmark was reduced by 65%. The
reforms not only favorably affected claims incurred after 2004, but also favorably affected certain
claims open at the time the reforms were enacted. Accordingly, as benefits of the reforms have
become more readily measurable, estimates of the cost of settling these older claims have been
reduced.

Additionally, internal loss control programs such as light duty/return to work, reduction of
reporting lag time, and increased use of medical provider networks contributed to reducing the
average cost of our claims.

Reduced claim costs, which the Company believes were driven by the continuing effects of California
workers compensation reform and internal loss control efforts, were observed during 2008 in both
its general liability and workers compensation programs claims in 2008. After analyzing the
historical loss development patterns, comparing the loss development against benchmarks, and
applying actuarial projection methods (including Paid and Reported Development and
Bornhuetter-Ferguson methods), the Company and its independent actuary selected lower estimated
ultimate losses for policy years 2006-2007 and prior for the evaluations performed during 2008,
which resulted in a decline in the self-insurance reserves of $22.8 million in 2008. Throughout
2008, the Company and its independent actuary observed better-than-expected reported and paid loss
emergence in the general liability and workers compensation programs. This better-than-expected
emergence was primarily observed in policy years 2005-06 and 2006-07 for both programs. This
observed emergence was the basis for management’s selection of lower estimated ultimate losses, and
a reduction in the overall reserves established.

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Note 8 — Other Commitments, pages 53-54

    4.

    We refer to your arrangement with International Business Machines Corporation (IBM)
which includes $116.6 million of base fees and $6.3 million of deferred costs. We further
note that you entered into several agreements subsequent to the original agreement
effective October 1, 2006. Please describe in detail how you accounted for each component
of the various agreements with IBM in each of the financial statements for fiscal years
2006, 2007 and 2008. Additionally provide us with the GAAP basis that supports your
write-off of $6.3 million in deferred costs during 2008 particularly given that it appears
that you have on-going commitments.

Response

The significant arrangements with International Business Machines Corporation (IBM) are summarized
as follows:

  I. Master Professional Services Agreement, effective October 1, 2006

 II. Contract Change Request (Application Maintenance & Support), dated January 23, 2007

III. Contract Change Request (Statement of Work for J.D. Edwards Implementation), dated
April 4, 2007

IV. Contract Change Request (OneSource Data Center), dated March 10, 2008

The discussion below summarizes the terms of these arrangements and the historical accounting for
each.

I. Master Professional Services Agreement

On September 29, 2006, the Company entered into a Master Professional Services Agreement (“MSA”)
pursuant to which outsourced substantially all of the Company’s information technology (“IT”)
infrastructure and support services to IBM, including: (i) data center and server services, (ii)
network services, (iii) VIP & workstation services, (iv) helpdesk services, and (v) application
maintenance services. The MSA became effective October 1, 2006, and was scheduled to terminate in
December 2013.

The base fee for these services was $116.5 million, consisting of annual service charges ($109.4
million) and transition costs (aggregating $7.1 million). The charges were subject to adjustment
based upon (i) actual usage (Resource Units), (ii) inflation (Economic Changes Adjustments), and
(iii) Benchmarking Review. The transition costs were billed during 2006 and 2007 and related to
work necessary to prepare IBM to provide continuing services under the outsourcing arrangement
(“Transition Services”) Transition Services included activities such as IBM hiring employees,
developing transition plans, establishing connectivity, developing process and procedures,
establishing a network operations center, migrating data and applications, etc..

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Accounting in 2006

In 2006, the Company accounted for the MSA in three separate components: (i) severance charges,
(ii) transition costs, and (iii) annual service charges.

Severance Charges

As part of the transition of IT services to IBM, 63 of ABM’s employees were scheduled to be
transitioned to IBM for a period of six months, commencing October 1, 2006. Included in the
transition costs discussed above was $0.9 million that IBM charged the Company in the fourth
quarter of 2006